2 weeks ago I put a 100,000 cash offer for a house that has been listed as a short sale for over a year. When?

Asked by Dawna, Cincinnati, OH Mon Jan 26, 2009

our offer went in, the house was listed for 137,9 but the next day after our bid went in, the house dropped to 129,700. Is this a fair bid? I have so many questions about short sales!

Help the community by answering this question:

+ web reference
Web reference:

Answers

6
Dave Harcourt, Agent, Cincinnati, OH
Tue Jan 27, 2009
BEST ANSWER
Dawna,
The problem with bidding on short sales is that the asking price is not simply based on the market value of the home or the sold comps for the area. The Seller has a mortgage on the property. The bank is allowing them to sell it and get out from underneath a pending forclosure. The questions are 1) what does the seller owe on the house and 2) what is the bank willing to accept. Sometimes the seller will actually add to the bank's allowable minimum with the hope that they can walk away with some cash. The bank may allow a decrease in price after a period when the house doesn't sell but they will reach a minimum value which they will not allow the seller to go below. The end result for buyers and agents is that the process becomes more difficult. The only thing you can do is make an offer with which you feel comfortable and understand that you may not get the home. Short sales can be frustrating and they can also be fraught with peril. I recently had a sale one day from closing when the listing agent realized that there was a second mortgage on the house and that she had sent the wrong HUD statement to the primary mortgage company, which did not include the seller paying the closing costs. On the day of the closing, I had to negotiate with both banks to correct the problem and had to have the sale closed by 2:00p.m. We wire transferred the funds at 2 on the dot. We were minutes away from the deal crashing after 2 months of paperwork, haggling over numerous items and unseen delays. I guess what I'm trying to tell you is "know what you're getting into" and find an agent that has short sale experience on the buyer side who will protect your interests.
Good Luck
0 votes
tom roberts, Agent, powell, OH
Mon Jan 26, 2009
A year does not seem right Dawna,they can take from 1 month 3months,etc.. but a year is far too long and if listing agent does not know what they are doing,who knows? You must not be working with someone?Plus now if in a declineing mkt,your 100k isnt such a great deal,the longer you wait,you should of been updated by now what is going on.Wow

TJ
Web Reference:  http://tjroberts.remax.com
0 votes
Sheri Mapes, Agent, Mason, OH
Mon Jan 26, 2009
Hello Dawna,

I agree with the other repsonses you have received so far. You have to understand that Short Sales do take a while for approvals. To answer your question about the offer, your offer should be what you want to give as fair market price in addition to what you Realtor suggests for you. Based on my experince with Short Sales from the listing and buyer side, you have to go with the comps for the Solds in the past 6 months. The BPO (Broker Price Opinions) will be based on that to have an amount the seller's bank will settle on. So if your Realtor can get you the Sold Comps, you will have a better idea of what to offer.

Hope that your sale works out.
Sheri Mapes the "Cincy House Expert"
0 votes
Danny Vinson, Agent, Cincinnati, OH
Mon Jan 26, 2009
Short sales can be tough. Even us realtors get a little frustrated with them. What are you questions exactly? Basically what a short sale is, is when the owner of the home owes more than the fair market value of the home. Any purchase contract must be approved by the bank if there is a short fall. (offer is for less than the owner owes). Its really an easy concept, its just hard to get the bank to work quickly, in fact its almost impossible...... Thats why using a realtor can really really help. Let me know what specific questions you have, I would be happy to help. Its hard to know if the bid was a good one, without knowing the home so we can run comps on the home to determine the fair market value.
Talk to you soon,
Danielle R. Vinson
dvinson@huff.com
0 votes
Brittany Sim…, , Columbus, OH
Mon Jan 26, 2009
Dawna:

Typically short sales (if actually approved by their lender) are advertised at the price the bank is willing to accept. When you bid anything below that number, it has to go through the short sale process again for approval by the lienholder.

Without knowing the comps in the area, it is difficult to know whether the price is a good offer or not. I think it sounds a little low since it is 25% less than the asking price which is a huge discount.

I am not in your market, however I am happy to answer any questions you have about short sales. I have helped many buyers with these properties.
0 votes
Marie Black, Agent, Lakewood Ranch, FL
Mon Jan 26, 2009
Did you put this offer in through a Realtor? The terms of your offer should be discussed with you prior to the submission of the offer. First ask your Realtor to help explain the terms of your offer again. In our area we also have Real Estate Attorneys that specialize in short sales and foreclosures.
0 votes
Search Advice
Search
Ask our community a question

Email me when…

Learn more